(Yicai Global) July 17 -- The Asian Development Bank updated its economic growth forecast to 5 percent for the Asia Pacific this year while maintaining its China outlook.

The regional development bank added 0.1 percentage point to its earlier forecast for the Asia Pacific and kept the 2025 outlook unchanged at 4.9 percent, according to a document released by the Manila-headquartered lender today. Meanwhile, the gross domestic product of China, the region's largest economy, is expected to expand by 4.8 percent this year and rise by 4.5 percent next year, it added.

The consumption of services keeps rebounding in China while exports and industrial activity are stronger than expected, and these factors support the nation's expansion despite the struggling property sector, per the report.

China’s economy widened by 5.3 percent in the first quarter due to higher consumer spending on services, strong industrial activities, and a rebound in exports. Vehicles, including electric cars, passenger and cargo ships, as well as electronics and high-tech goods were in high demand.

The outlook for India and Southeast Asia remains unchanged at 7 percent and 4.6 percent this year, respectively. The forecast for the region of Caucasus and Central Asia, which has Armenia, Kazakhstan, and Georgia, is raised to 4.5 percent from the previous projection of 4.3 percent. For the Pacific, which includes Fiji, Nauru, and Tonga, the ADB maintained a 3.3 percent outlook.

Headline inflation in developing Asia is projected to ease further from last year's 3.3 percent to 2.9 percent this year, stabilizing at 3 percent in 2025. Inflation in China picked up to an 11-month high of 0.7 percent in February, rising after a period of deflation in late 2023.

Interest rates in the United States and other advanced economies continue to shape the outlook, posing several downside risks. Uncertainty regarding the election outcome in the US, escalating geopolitical tensions, trade fragmentation, and extreme weather could hurt growth. Meanwhile, La Niña, a cooling pattern of sea surface temperatures, should be considered an upside risk due to expected higher rainfall and cooler temperatures, according to the report.

Established in 1966, ADB is owned by 68 members, most of which are regional such as India, Japan, and Vietnam, but also others including the United Kingdom and Canada.

Editor: Emmi Laine